Derek Weaver, director of cash management at Sunstone Hotel Investors Inc., recently received a $200,000 check in the mail,a big one among the 300 to 500 checks the hotel owner deposits every month.
In the past, an administrative assistant in the company’s treasury unit would be sent to deposit the check at a Wells Fargo & Co. branch several miles from Sunstone’s headquarters in San Clemente.
If the courier didn’t beat traffic before San Clemente High School let out during late afternoon rush hour, it would take about half an hour to reach the branch.
The assistant then would have to wait for a teller before depositing the day’s checks.
Those were the old days.
Sunstone, which owns 61 hotels, is among the first companies in Orange County to take advantage of the Check 21 federal law, which went into effect a year ago.
The law gave an electronic image of a check the same legal status as a paper check. Banks, which used to accept only original checks, now take electronic check deposits from companies that have the right equipment.
The change was spurred by fallout from the 2001 terrorist attacks, which left $47 billion in checks in limbo.
Subsequent ice storms, hurricanes and other natural disasters have crippled parts of the U.S., creating major headaches for banks, merchants and their clients.
Sunstone paid $800 for an electronic check scanner that links via the Internet to Wells Fargo. The scanner takes snapshots of the front and back of checks received from its hotels and other customers.
The check images are sent to Sunstone’s account at Wells Fargo, which draws down the funds from the payer’s account, just as it would with a paper copy.
There’s no waiting for checks from processing centers scattered around the U.S. or handling by a Federal Reserve branch in Los Angeles. There’s also no waiting for an armored truck to pick up deposits, or for an airplane stranded on a tarmac waiting to take off with bags of checks in its hull.
The company’s checks sometimes are posted to its Wells Fargo account within a matter of hours instead of a few days. That puts an end to the routine two- or three-day float consumers and others previously enjoyed while checks toured the country’s bank system before returning to the originating bank.
The savings from electronic deposits could be thousands of dollars a month for Sunstone. The company has made several hotel acquisitions since going public last year, and is juggling vendors from one coast to the other.
“We can’t quantify it, but there’s the savings from insurance risks caused by driving to the local branch to deposit the check, gasoline, labor, the speed of availability of the funds deposited, and keeping fewer supplies on hand to print checks,” said Lindsay Monge, Sunstone’s vice president and treasurer.
Weaver latched on to the check-scanning idea nearly a year ago after seeing a demonstration of the device,called Desktop Deposit by Wells Fargo,at a meeting of financial executives in San Diego.
He finally got software installed on 10 computers in Sunstone’s treasury department at the beginning of the summer.
Taking a cautious approach to electronic checking is Santa Ana-based Orange County Teachers Federal Credit Union, which has $5.6 billion in assets and handles more than 200,000 checks a day.
The credit union, OC’s largest, doesn’t accept electronic checks, because the few it receives doesn’t justify the cost to set up a system for processing them.
Nancy Powers, vice president of information services at the credit union, worries about legal implications over images that aren’t read correctly.
“You can’t tell by looking at the check if it is image-friendly,” she said.
Sunstone’s Weaver said there can be problems with the electronic system. The scanning device reads checks so carefully that if too little ink is used to print the routing number, account number and other bar code data, then the system rejects the check.
Other banks and financial service providers that have tapped into Check 21 locally include Charlotte, N.C.-based Bank of America Corp., San Francisco-based First Republic Bank and Brookfield, Wis.-based Fiserv Inc.
Folio Wine Co., a Napa-based winery launched in the past year by winery heir Michael Mondavi, was among the first in Northern California’s wine country to use the imaging system.
“I have other things to do than just drive to the bank,” said Folio controller Brad Saunders.
Wells Fargo said it’s processed more than $3 billion in checks using its Desktop Deposit system.
Companies such as Sunstone also can cut, scan and make payments by writing their own checks, providing they have the correct ink and paper.
Another advantage for using check scanning: Banks process electronic checks ahead of paper-based checks.
